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Aspects of the new repurchase system of monetary control in South AfricaSpringfield, Samantha Claire January 2001 (has links)
The main objective of monetary policy is to protect the value of the currency, and in so doing, achieve the objectives of maximum economic growth, development, and the creation of employment opportunities. As from 1985, under the advice of the De Kock Commission, the South African Reserve Bank (SARB), implemented the classical cash reserve system of monetary control. Under this system, the SARB was willing to refinance the money market shortage fully, automatically, and on certain predetermined terms, conditions and costs. However, since the new political dispensation in 1994, South Africa’s financial markets have become more globalized, liberalised, and integrated. Thus, the classical cash reserve system had lost its usefulness, and was no longer effective. As from March 1998, the SARB implemented the new repurchase system of monetary control. In implementing the repurchase system of monetary control, South Africa was adopting a more eclectic approach. This system is aimed at making monetary policy more effective and more flexible in a financial environment filled with complexities. This study finds that the repurchase system has thus far been successful in meeting its objectives. Interest rates are more flexible and sensitive to developments in the domestic and external environment, the signalling mechanism of the SARB has proved to be successful, accommodation and interest rates are closely related and the interbank market has become more developed. Therefore, the repurchase system appears to be more efficient than the previous system of monetary control in South Africa.
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Small and medium enterprise financing and credit rationing : the role of banks in South AfricaMutezo, Ashley Teedzwi 06 1900 (has links)
The potential of small and medium enterprises (SMEs) in promoting economic growth in both developed and developing countries is widely accepted and documented by both scholars and policy makers. Particularly lacking are studies on the evidence in support of the importance of credit rationing to the sustainability of SMEs in an emerging economy like South Africa’s. This specific problem, especially in the developing countries, has been identified as the major bottleneck in realising socio-economic potentials of SMEs in those countries. However, one of the major ways of addressing the challenge of inadequate funding that exists within the SME sector is the use of bank credit. This study was therefore undertaken to explore the role of commercial banks in the provision of credit to the SMEs in South Africa.
This study focuses on the issue of the relationship between the banking industry and SMEs. In particular, the problem of credit rationing of, and discrimination against SMEs by commercial banks was investigated. Because credit rationing and finance gaps can stem from imperfections on either supply-side (banks), or demand-side (SMEs), or both, the intention of the study was to examine both of these variables in order to uncover the implications of their relationships.
The empirical analysis is based on survey data collected by means of a structured questionnaire which was distributed amongst banks and SME borrowers in the Gauteng Province of South Africa. Contrary to the general view that commercial banks are disinclined to provide credit to SMEs, the study found that South African banks are keen to serve the SMEs and are therefore making efforts to penetrate this potentially profitable market segment. However, several obstacles are potentially restricting the involvement of banks with SMEs in South Africa. The findings revealed that regulations such as the Financial Intelligence Centre Act (FICA) and the National Credit Act (NCA) came out strongly as major hindrances of bank financing to SMEs. Furthermore, it was shown that compliance with the NCA was ranked higher than credit history and profitability as a factor hindering the approval of SME loans.
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However, by using the structural equation modelling (SEM), the results also show that there is a positive and significant influence of lending technology and collateral on the supply of credit to SMEs. Variables such as creditworthiness, collateral and e-banking were found to have a positive and significant impact on the provision of credit to SMEs by commercial banks. For both the supply- and demand-side analysis, technology came out as the most important predictor of SME access to finance. This means that banks should strive to align their lending techniques with the dynamic technological developments so as to reach as many SMEs as possible even in the geographically dispersed regions. It is anticipated that improving SME access to bank credit could be the key to the growth and sustainability of SMEs, the alleviation of poverty and unemployment; and consequently leading to the growth of the South African economy. / Business Management / D. Com. (Business Management)
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A structured approach to the strategic positioning of asset-backed short-term finance : a South African perspectiveLaas, Andre Otto 06 1900 (has links)
The emerging financial industry of asset-backed short-term finance was investigated by this study. Literature indicated that banks, locally and globally, are forced by regulation and the use of information technology, to rely less on human judgement and more on programmed decision-making, when evaluating loan applications. This leads to time-consuming processes with non-standard loan applications and loss of opportunities for business persons. Asset-backed short-term finance is a market response to this tendency. Due to the emerging nature of this industry, no previous academic description of or investigation into this industry could be found – a gap in academic literature which this study aims to fill. The industry is strategically positioned in relation to banks by focusing on functionality for urgent non-standard loan applications (period between application and decision, and access to decision-makers) as value proposition, where banks are found lacking. Relatively high interest rates form the profit proposition, as firms in this industry have limited access to funds. Collateral is central as risk-mitigating strategy, forming a part of the profit proposition. The people proposition is essential, as the industry is distinguished by individualised decision-making. A survey among customers of this industry identified four clusters of potential customers: The first had no needs unfulfilled by banks, while the other three clusters were attracted by either functionality, or the evaluation of collateral in contrast to repayment ability, or a combination of the two. A survey among providers revealed hesitance to supply information and a low level of agreement on strategic matters – possibly due to the emergent nature of the industry. It is asserted that the basis for further study was laid. / Business Management / D. Com. (Business Management)
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